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Trolls: Are They For Real?

Trolls: Are They For Real?

October 20, 2011
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" Unfortunately, it looks as if we are seeing the tip of the iceberg when it comes to patent trolls. "

FSC has been approached by a number of studios that have received notices from patent companies claiming patent infringement. Patent challenges are becoming an increasing threat to adult online revenues. Non-practicing entities (NPE), i.e. patentees that do not practice their own inventions, are buying up existing patents at an alarming rate and targeting companies that may or may not participate in activity that violates one or more of their patents. These entities are known more widely as patent trolls.

With little to no downside, these patent trolls send notices to or file claims with companies accusing the companies of violating their patent. Often their claims lack substance for a number of reasons. The patent may not apply to the activity of the business; the patent itself may be called into question for obviousness or prior art, meaning that the idea or activity was present before the patent. There are more issues to take into account but suffice it to say this is a complicated issue and the patent trolls are counting on businesses settling rather that paying the exorbitant legal bills that come with fighting.

Unfortunately, it looks as if we are seeing the tip of the iceberg when it comes to patent trolls. Filing frivolous suits against businesses in the name of patent violation has become a business model and is beginning to be an industry unto itself. The small town of Marshall Texas is rife with companies that have rented offices and have filed their business licenses in Marshall for the sole purpose of being able to file suits in this patent-troll friendly town. These patent troll businesses have no staff and no one is in their offices but it is enough to drag an unsuspecting company into a court, in Marshall, Texas.

As your trade association, we at FSC have explored how we can best be of service to our members to be a resource and protect you from this increasing threat. We have spoken with a number of patent attorneys and while this is a complicated issue, there are some basic action steps that can save everyone a great deal of time and money.

The first step is to educate and inform adult businesses of the options available to them if and when they receive a letter claiming patent on their business model. The second is to create an effective system of sharing and networking amongst adult businesses on the subject of patent claims, making attacks on our industry unattractive to potential patent trolls.

FSC is in the process of developing a networking and education program specifically on the subject of patent trolls and patent violation challenges. FSC will not charge additional fees for this program. Nor will FSC encourage our members to take action one way or another. As your trade association it is our responsibility to make sure that our members are well educated and have the best resources available to make sound business decisions for their businesses.

Stay tuned, we will be rolling out networking and educational opportunities on the issue of patent trolls throughout the coming months.


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